Friday, February 01, 2013

The Golden Rule and the Gold Standard

In
his book, “The Gold Dinar and Silver Dirham: Islam and the Future of
Money,” Imran Hosein makes a compelling argument in favor of returning
to the Gold Standard, a concern shared by many non-Muslim economists.

Avik Roy writes in the National Review, “Investors
see over and over again the pattern by which governments depart from
hard-money policies (such as the gold standard) in order to engage in
deficit spending, and then devalue their currencies in order to reduce
the value of the debts they then incur. It is a story that all too
frequently ends in credit default and economic collapse.”

Hosein
similarly promotes the minting of Islamic gold dinars in order to
produce what he calls a riba-free economy. Since paper money is subject
to inflation and devaluing currency, a debt-based society must indulge
in charging or paying interest, which is against Islam, and often
results in financial slavery. Islamic law requires that debts be paid
with items that have intrinsic value, such as dates or precious metals.

Such views are viewed as threatening to the money
lenders. The International Monetary Fund (IMF) prohibits gold-backed
currencies for its member states. Thus, those who promote gold-backed
money are often thought of as economic terrorists.

Nevertheless, as the dollar continues to decrease in
value, demand for gold has increased. Many countries have started
minting Islamic coins, which have become very popular for trading as
currency. Today, a gold dinar sells for $250 while a silver dirham is
worth $6.53. Even in places like Norwich, England you can purchase a
haircut or lunch using these Islamic coins, as a result of local
community organizing.

Large banks and nations still use gold to settle
their debts. The gold is (or was) stored at the Federal Reserve Gold
Depository in New York City, or the similar institutions at the Bank of
England and Bank of France. In 2009, an international scandal erupted
when a German gold bullion dealer discovered that a gold bar was fake.

What Really Happened reports in “Robbing Mali to Pay
Germany” that: “Because many of the fake gold bars had the marking of US
sources, nations began to ask for audits and tests of the gold bullion
held in their name by the New York Federal Reserve. To the surprise of
many, the New York Federal Reserve refused! Indeed the New York Federal
Reserve refused the German government permission to simply look at their
bullion!”

The German government has now demanded that their
physical gold be repatriated back to Germany from both the Bank of
France and the New York Federal Reserve. Switzerland also intends to
repatriate all of their gold held by the New York Federal Reserve and
other central banks.

“Both the Bank of France and the New York Federal
Reserve have stated that the process of returning the gold will take
years… The delay makes the situation clear. Neither the Bank of France
nor the New York Federal Reserve actually have the gold Germany
deposited.”

Mali is one of the world’s largest gold producers.
Together with neighboring Ghana they account for 7-8% of world gold
output. As Germany started demanding their gold back from the Bank of
France and the New York Federal Reserve, France (aided by the US)
decided to invade Mali to fight “Islamists” working for “Al Qaeda.”

Why are France and the US bombing Mali instead of
just buying the gold they need? The problem is, China is able to outbid
France and the US. Like the US and French interference in Sudan, this
war is being waged to prevent China from investing in African minerals.
Gold mining has also led to political unrest in the Congo. No doubt the
Islamist struggle for Mali is deeply connected to the nation’s quest for
self-determination, including the right to mine and sell gold in a way
that benefits the people of Mali.

Even in the absence of war, gold mining is hard and
dangerous work that comes with huge ethical considerations brought to
light by environmentalists and fair labor activists. The Environmental
Protection Agency (EPA) estimated last year that the cost of cleaning up
metal mines in the US alone could reach $54 billion. Major jewelry
companies have come under pressure to show a traceable supply chain for
their gold. JCK magazine reports:

“The No Dirty Gold campaign calls gold mining one of
the “world’s dirtiest industries,” claiming that one ring’s worth of
gold production creates 20 tons of mine waste. The mining industry
disputes that characterization and that figure, but no one doubts that
gold mining—particularly its use of cyanide—affects the environment…
Dirty gold mining has also brought health concerns and land disputes to
communities surrounding the mines.”

“Typically, men live in gold mining camps for a month
or two at a time, working 12-hour days, seven days a week. At the end
of a 6- to 8-week shift, the men rotate out of camp to their homes for
two weeks of rest. These long periods away from families have led to the
rise of commercial sex workers in small villages near the mining areas.
HIV infections are then spread into the general population when miners
infect their spouses and unborn children. High rates of HIV infection
have been recorded in every gold mining country, especially South Africa
where some mines have reported one in three miners infected.”

As Muslims press forward, advancing the use of gold
currency as halal money, we will need to balance our enthusiasm with
concern for ethical investments that do not harm the environment or
exploit workers. We must also become alert about the question of whether
the gold we buy was stolen through war or if it was acquired in a fair
manner.

“O ye who believe! Do not appropriate each others’
property and wealth in a manner that is unjust and unfair: Rather, let
business be transacted in a manner that brings mutual satisfaction.”
(Quran 4:29)

1 comment:

traducteur
said...

I come from a gold-mining region of Canada. This article will be music to the ears of my neighbours!

It's clear that the American and French authorities cannot be trusted to hold other countries' gold. The minting and circulation of Islamic gold and silver coins will help break the Western (mostly American)stranglehold on the world's resources.